Magazine article Global Finance

March of the Machines

Magazine article Global Finance

March of the Machines

Article excerpt

Global Finance: Could you explain the core elements of Licaimofang's technology in simple terms?

Yuan Yulai: Licaimofang is China's first "All AI" robo-advisor institution, and the technologydriven core competence of the company comprises fully Al-driven decision-making by machine. Supporting 1his process is the customization of 'isk for clients, holding the bottom line of every customer's *isk and providing optimal asset allocation across a range of asset classes. The automated financial-advisory service provided by Licaimofang is based on a totality of customer data.

GF: How does China's robo-advisor market differ from that of the United States?

Yuan: In terms of investment strategy, because China's market s inefficient, it requires active management rather than passive management, which is typical of that sector in the US market.

Because customers are relatively immature in terms of their investment experience, the requirements for personal guidance and education-oriented sen/ices are higher. China's financial-advisor market is a relatively blank slate, so there is no "traditional" financialadvisor system.

GF: Why would I seek to use a robo-advisor when there are many passive-investment strategies, such as investing in ETFs and index funds, at my disposal?

Yuan: The Chinese market is inefficient and the risk premium unstable. Still, active management funds in the Chinese market are generating excess returns versus ETFs. In short, active management funds are still important in China; customers are very much aware of that. …

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